Book Summaries | The $500k/year Solo Dev Agency Playbook - Price and Negotiate Like a Pro

December 29th, 2023

Introduction to Chapter 3 (Price and Negotiate Like a Pro) in The $500k/year Solo Dev Agency Playbook

Below you’ll find the most important notes that I took when reading the third chapter of The $500k/year Solo Dev Agency Playbook. If you’d like to grab a copy for yourself, check it out here.

Key Lessons

  • Negotiation Approach: Prioritize client input, allowing them to disclose needs and expectations during negotiations.
  • Hourly Rate: Set hourly rates reflecting your skill level and reputation; avoid lowballing to maintain perceived value.
  • Key Rates for Freelancing in the US: $50/h and $100/h serve as baseline rates; negotiation skills determine the sweet spot. As a general rule, charge a freelance hourly rate that is 1.5x the hourly rate that you would receive as a full-time employee.
  • Enterprise Negotiations: Recognize the fixed budget nature; avoid entering a rate-cutting battle, preserving your established rates.

Pricing Principles

  1. Never Lowball Your Rates:

    • Maintain pricing integrity; even inexperienced individuals should ask for more and offer discounts if needed.

  2. Offer Discounts Strategically:

    • Discount with non-financial perks, project scope adjustments, or added value to maintain your base rate.

  3. Consistently Raise Prices:

    • Increase rates annually by 15%-20% to align with market demand and your growing expertise.

  4. Transition to Fixed Pricing:

    • Develop expertise, risk tolerance, and client intuition to excel in fixed pricing models, providing greater revenue potential.

  5. Charge 10% of End Value:

    • Price projects at around 10% of the value delivered, maximizing revenue while accounting for the unique value you bring.

Advanced Pricing Tactics

  1. Psychological Pricing Tactic:

    • Introduce limited-time offers for services you prefer not to provide, creating a sense of scarcity and potential for additional revenue.

  2. Raise Prices by Avoidance:

    • Present low-leverage tasks (e.g., maintenance, meetings) as optional, suggesting alternatives or lower-cost specialists, allowing you to focus on high-impact work.

Mastering Pricing Strategy

  • Progression of Pricing Strategy:
    • Baby: Sell hours based on lines of code.
    • Infant: Sell hours to save time.
    • Teen: Sell hours for outcomes.
    • Adult: Sell outcomes.
    • Grandpa: Let clients sell themselves.